Even before the NFT frenzy subsided, the Web3 buzz began to loom. The peculiar crypto hole has never stopped giving birth to innovations: CEFI, DEFI, DAOs, NFTs, Metaverse, and now the Robin Hood of all Robin Hoods.
Also referred to as the new iteration of the World Wide Web, the Web3 or Web 3.0, is within itself a movement aimed at stealing power from the rich ( here, tech goliaths such as Google, Amazon, etc.)and giving it back to the poor(users).
Proponents speak about it with such an intense glow on their faces that people have become too blind to believe them.
The Internet corridors are currently bombarded with the below statements:
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Web3 is ownership.
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Web3 is freedom.
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Decentralization is the future.
Is this all true or just a deliberate attempt by the proponents to throw dust in your eyes? Does Web3 even make sense? What will the future look like?
If your heart is in search of answers to such questions, go ahead.
What is Web3, exactly?
Currently, the truth is that Web3 is just an abstract idea, a work-in-progress endeavor. Everyone has their own version of the Web3 definition. But one thing is for sure: the idea of Web3 relies entirely on decentralization — meaning no one but the people themselves will own this version of the web.
Here’s how Gavin Wood, Ethereum’s co-founder and the man who coined the term “web3,” defines it.
“Web3.0 will engender a new global digital economy, creating new business models and markets to go with them, busting platform monopolies like Google and Facebook, giving rise to vast levels of bottom-up innovation.”
Whoa! Sounds great, right?
Crypto Enthusiast Sal Delle Palme puts it a little bit boldly.
We’re witnessing the birth of a new economic system. Its features and tenets are just now being devised and refined in transparent ways by millions of people around the world. Everyone is welcome to participate.
This one is a real treat to the ears, I know — But don’t you feel they sound too good to be true, let me prove it.
Public-owned web3 or VC-owned web3
Most of the information available about Web 3 is either too idealistic or gimmicky. Enthusiasts say that Web 3 will be owned by the public, but apparently, it seems that VCs own it. As Jack Dorsey puts it:
“You don’t own web3. The VCs and their LPs (limited partners) do. It will never escape their incentives. It’s ultimately a centralized entity with a different label. Know what you’re getting into.”
Big VC firms are pouring billions of dollars into creating an alternate world of finance, entertainment, gaming, commerce, etc. The only difference between this new world and the existing infrastructure is that the former is marketed as “Decentralized.”
Do you remember the last time you used a Web 3 application? No right.
Yet, we hear people breathlessly talking about how web 3 is the future, how it will take down Financial institutions and the Big tech. And how decentralization is the most viable solution to today’s monopoly.
Why Can Decentralization Fail Again?
The majority of people today have the misconception that cryptocurrencies and decentralization will drive the growth of Web 3. The idea of a decentralized web sounds quite impressive: A web where no one but you exercise all the control. But no one talks about how quickly centralization happens on top of decentralization.
How is decentralization unsustainable?
Firstly, I must remind you that the idea of decentralization is not new; multiple instances in history prove it.
You already know the first version of the web and how it used to be controlled by none., i.e. decentralized.
However, Google created a search engine that was so brilliant that it has since become the most crucial component of the web — recentralizing it. During the rise of personal computers, computing became decentralized so that anyone could build PC architecture with no one controlling it. But even decentralized computing couldn’t endure long as Microsoft figured out how to recentralize the computing industry by building its proprietary software.
A similar pattern has been recorded in many more instances, leading to the development of an important law. The law of conservation of attractive profits:
“When modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.”
Blockchain believers consider Blockchain the most viable answer to centralization but remain quiet when asked about the rapid consolidation of Bitcoin mining into very few hands.
The world’s first and most decentralized currency, Bitcoin, suffers from the fear of seeing some form of centralization — as mining is increasingly becoming an activity of big businesses due to a substantial rise in complexity.
Web3 applications are vulnerable
Web3 apps, also known as Dapps or Decentralized applications, can be easily exploited because of the below reasons:
- Hard to build- Since this is a nascent technology, we don’t have many great web3 developers, so building an errorless dApp is almost impossible. But even a small error in such dApps can cause big losses since they mostly deal with financial assets.
- **Open Source Code-**Though, open source code nature, is a good thing, it also makes a dApp vulnerable. Because this is a new technology, many effective practices are still unknown. As a result, it becomes difficult to hide sensitive & private information from hackers.This is why we frequently see news articles about how tokens worth millions of dollars were drained from a dApp.
- Consensus Mechanism- All the members collectively make decisions in a dApp through voting, which is a rather time-consuming process, and hence slows down the development of the dApp.
Conclusion
Although the revolutionary nature of Blockchain cannot be disputed, a great number of issues still need to be resolved before we can declare it the web’s next big thing. Decentralization advocates are currently overly idealistic when they refer to it as the “future.”
“The prediction I can make with the highest confidence is that most amazing discoveries will be the ones we are not today wise enough to foresee.”
The future is too complicated to predict; therefore, don’t dip your toes into something simply because the world is talking about it.
Also published here.